Nexi Reports 2021 Results Slightly Ahead of Our Expectations but 2022 Guidance Disappoints

Narrow-moat Nexi reported full-year results in line with consensus estimates polled by the group itself. On a like-for-like basis, including Nets, revenue grew 10% to EUR 2,269 million, outpacing costs, which came in at EUR 1,174 million, up 8%. EBITDA grew 12% to EUR 1,095 million. These results were decent in our view and are still heavily affected by the latest coronavirus developments across Europe. We already modeled Nexi including the Nets and SIA acquisitions on a pro-forma basis and the combined entity did perform slightly ahead of our expectations. Our revenue and EBITDA growth assumptions for 2021 of 8.5% and 11.0%, were beaten comfortably by 10.0% and 13.6%, respectively. However, on a negative note, Nexi’s guidance for 2022 did disappoint. The group expects revenue to grow between 7%-9% with EBITDA climbing 13%-16%. We generally believe this guidance is a reasonable medium-term target as it aligns with our current five-year average growth assumptions in our model. However, the guidance did deflate our expectations for a stronger 2022, however. We had expected European travel should start to come back stronger this summer, bringing higher-margin volumes back to Nexi. As such, we believe positive developments regarding COVID-19 restrictions and lockdowns and higher travel activity across Europe in the summer will result in risks to the upside to Nexi’s guidance. We don’t expect a material change to our fair value estimate of EUR 18 per share. Shares look undervalued.